News last night from Japan that their economy is under stress was enough to tip the sales sellers again after Friday’s sell off in the beans. Beans are down 47 today, looking at testing the 14.00 level. Will the Chinese stay true to form and buy cash beans here? On a $1.50 bushel/ break?
Once again, the down move comes the week after all of the November puts expired.
Although corn held up admirably last week and even most of last night, it has finally broken below the 7.32 level. If you look at my video from Friday, I suggested that the market might be subject to a capitulation sell off if 7.32 didn’t hold. We have been in that range with 7.32 as support and 7.60 to 7.70 resistance above.
Today’s low in CZ 7.12, Currently trading at 7.15 7.05 is the down side target. However, if we see 7.04, 7.00 is a pretty sure bet. Worse case sell off? try 6.60 in CZ. That is the July gap in the daily charts. As for CH, March option. Support below comes at 709. Below there, its 6.68 which is the gap on that chart.
In the beans, SH march contract…14.03 failing opens door up to 13.55 and possibly the June lows at 12.50. If you are a bull, don’t scoff at that possibility. We have dropped 1.75 in the past 10 days.
Finally, the Dow futures are holding, for now at 12,750. This week is key for the bulls. After the correction we have had, you would expect fresh money to come in and look to buy this dip. I continue to want to buy this dip, fading the negative tone of the national press. One caveat. I would not have a long position without a protective sell stop below. Buying breaks like this can get pretty emotionally and financially draining if you don’t respect the risk. At the end of the day, we are looking to catch sentiment the wrong way.
Be careful out there.
CER